Report: Most Chinese Think Of Cars As Commodities
A report by ACNielsen China shows that with the exception
of Mercedes and BMW, most Chinese think of cars as being
essentially the same, and make their purchasing decision
based on price. The telephone survey of 2,500 interviewees
was conducted in Beijing, Shanghai and Guangzhou, the
three largest and most prosperous cities in China.
When it came to car purchases, the respondents were much
more interested in the price than the brand, and would
make their car purchasing decisions based on the best
price they could get. The only exceptions were the Mercedes
and BMW brands.
While Chinese auto demand has grown at a furious
pace over the past year, it is very difficult for
car makers to become profitable in a market with 28 auto
makers. The ACNielsen survey suggests that the auto makers
are now in a race to the bottom, sacrificing short-term
profitability to capture market share without any clear
strategy to win.
While the Chinese central government has been pushing
for consolidation of the industry for more than 10 years,
almost all of China's provincial governments have refused
to cut off financing their own auto manufacturer on the
provincial level. China has 31 provinces, and most of
the car makers were set up in the 50s and 60s when China
sought to diversify its industries, without considering
costs and efficiency. Now, most of the companies have
forged joint ventures with US, Japanese and European auto
manufacturers to produce automobiles in China. Most of
these joint ventures are unprofitable even though automobile
sales in China are skyrocketing.
The report also underlines how, on the marketing and
dealership level, Chinese auto makers have failed to build
relationships with their customers. Without this relationship
building, the Chinese see most cars as just another commodity.
The trend points to market consolidation, which will
be driven by market forces instead of government dictate.
The market should clump around 2-3 leading auto makers
who can produce cars cheaply and efficiently, and the
market leaders, Mercedes and BMW.
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